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Urban Transport Pricing Reform With Two Levels Of Government

  • Stef Proost


    (K.U.Leuven-Center for Economic Studies; UCL - CORE)

  • Akshaya Sen

This paper analyses two challenges in the reform of urban transport pricing. The first challenge is the construction of an optimal package of urban transport pricing instruments assuming one benevolent government level that maximizes overall welfare. We examine the welfare gains from implementing in succession better parking prices, improved public transport prices and time varying tolling. It is found that parking and tolling are the most important elements of the optimal package and that the alternative policy instruments are sub-additive in their benefits. The second problem studied is the use of these pricing instruments by different government levels. We examine a case where an urban government controls parking fees and the regional government controls the tolling. Although both government levels have different objective functions, we find that the overall efficiency losses in the Nash and Stackelberg equilibria are limited.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0503.

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Length: 27 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:ete:etewps:ete0503
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  1. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer, vol. 3(3), pages 397-412, July.
  2. Edward Calthrop & Stef Proost, 1998. "Road Transport Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 335-348, April.
  3. Richard J. Arnott & Ronald E. Grieson, 1978. "Optimal Fiscal Policy for State and Local Government," Working Papers 291, Queen's University, Department of Economics.
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